We’ve heard a lot of noise around the topic of supply chain control towers in recent years. It has different meanings depending on who you ask. Unfortunately, the vision and strategy are narrow and miss the mark on delivering true end-to-end visibility. Some companies, for example, have regional control towers that translate into outsourced activity to a 3PL or logistics partner. Essentially, they end up throwing people at problems to get a view of what may be going on. After all, considering the complexities of systems, parties and touch points, it is extremely difficult to link things together. It’s hard to figure out what’s happening and why. Yet, the vision for businesses today is the migration away from regional silos of transportation and distribution, to a single end-to-end view of global business. The innovators will get there. Here’s how.
Urgency to be Agile
A major driver of this change towards end-to-end visibility is the need to respond faster to supply chain disruptions. Much has been written recently on the impact of supply chain disruption upon a company’s brand, share price and reputation. This mindset has altered the approach heavily touted three to five years ago, when supply chain transformation was all about cost reduction. Today, it is all about differentiating the customer experience and being more agile. Control towers provide visibility, and thus enable agility to eliminate delays and disruptions that hinder the customer experience.
The control tower movement started in two variations. One way focused on 3PLs, relying on them to deliver the visibility and decision making necessary to assure the flow of supply. The other route is a larger vision, where all existing supply chain apps come together beneath a single umbrella to support everything – globally – from forecasting to S&OP, execution and logistics. This model brings with it significant complexities, and a lot of consulting companies are moving in this direction to ease some of the burdens.
A Layered Approach
Companies require supply chain visibility to have supply chain control. The control tower approach requires extensive visibility across regions and modes. Building a control tower requires deep considerations. The typical supply chain at a large company has a number of different internal ERP systems, portals and various supply chain applications. Add to that the number of partners they work with: carriers, 3PLs, freight forwarders, banks, tier 1 and 2 suppliers…The supply chain of today is much more robust than a single chain: it is a multi-enterprise community with high numbers of touch points. Considering all of these parties, the functions they serve, and the different signals and apps already being used, the idea of standardizing on one TMS seems quite daunting. Companies have multiple business units, different products, different markets and varying supply chain requirements. It doesn’t make sense to force feed a single model.
The supply chain layer approach says, “Let’s standardize the data inside and build a community model around the supply chain data – with standardized community-based processes – allowing all supply chain partners to collaborate on it.” The key is placing an end-to-end supply chain layer that all existing applications can plug into. This delivers a single platform for sharing and viewing all data, regardless of region or mode. The data is integrated and each executive views and uses the information in the format they require. Most importantly, different messages from other partners and supply updates from carriers or suppliers are captured. Anything that’s happening in the supply chain that impacts a customer shipment resides inside that backbone layer. This is true end-to-end visibility through a supply chain control tower.
The difference in this approach is companies don’t have to build or standardize or throw out applications. There’s no forced standardization of processes requiring a local or regional approach. Visibility in a cloud-based layer brings together all supply chain apps and integrates the data to empower all users.
Ajesh Kapoor is Senior Director of TMS Products at GT Nexus.